Raízen Secures Brazil’s Largest Out-of-Court Restructuring with 75% Creditor Approval on R$64.7 Billion Debt

The restructuring addresses debts across 19 financial institutions and 80 major bondholders, converting 45% of claims into equity units priced at R$0.25 per share, matching Shell’s capital injection terms. The remaining 55% converts into new debt instruments split between two successor entities: Raízen Combustíveis will handle fuel distribution with debt priced at CDI plus 2.75% in local currency or 8.50% annually in dollars, while Raízen Energia covers ethanol, sugar and bioenergy operations with debt at CDI plus 1.25% or 7.00% in dollars. Raízen Energia debt includes a three-year interest capitalization option that would increase spreads by 200 basis points if exercised, providing near-term cash flow relief.

The debt crisis stems from failed bets on second-generation ethanol technology that faced construction delays and cost overruns as Brazil’s Selic rate climbed from 2% in 2021 to double digits, multiplying debt service costs. Raízen’s 2021 initial public offering raised R$6.9 billion on optimism around energy transition, but operational execution faltered while competitors advanced with corn-based ethanol. The company announced sale of Argentine operations for US$1.4 billion to Mercuria Energy Group this week, part of asset divestment commitments under the plan.

Chief Financial Officer Lorival Nogueira Luz Jr. assumes the additional role of Chief Restructuring Officer while the current board remains in place until March 2027, when a new seven-member board takes over. Ometto’s continued board participation depends on completing the R$500 million Aguassanta investment. The plan includes cash settlement options with discounts for smaller creditors capped at R$150 million total and R$9,750 per claim.

Creditors supporting the plan include international bondholders, local debenture holders, and agribusiness receivables certificate holders. The restructuring excludes suppliers, customers and fuel station operators, whose obligations continue under normal terms. Standard & Poor’s downgraded Raízen seven notches in February 2026, described as one of the agency’s largest single downgrades for a Brazilian company, while Fitch cut the rating eight levels. Raízen shares have declined over 60% since the IPO as the restructuring dilutes existing equity holders while creditors gain substantial ownership stakes.